LATAM Airlines Group SA (LTM) shares are on the rise in early Tuesday trading, fueled by a positive outlook from Morgan Stanley. The investment bank believes the airline, now emerging from bankruptcy, is stronger, leaner, and poised for significant growth.
Analyst Jens Spiess initiated coverage of LATAM Airlines with an Overweight rating and a price target of $40, highlighting the company’s strong performance. Spiess points to LATAM’s profitability, which has surpassed pre-pandemic levels, while its U.S. legacy peers have yet to reach similar heights. Despite this positive trajectory, LATAM’s stock valuation has not fully recovered.
Spiess emphasizes that LATAM’s shares are down 55% since pre-pandemic levels, presenting an attractive opportunity for investors seeking growth. He argues that the current valuation doesn’t reflect the sustainability of LATAM’s earnings, which he expects to remain strong for the foreseeable future.
Furthermore, Spiess sees LATAM’s exposure to under-penetrated markets as a key driver of above-average passenger growth over the next five years, projecting a 5% compound annual growth rate (CAGR) in revenue passenger kilometers (RPK). Based on this outlook, Spiess has named LATAM Airlines as a top pick.
At the time of publication on Tuesday, shares of LATAM Airlines had risen by 0.80% to $26.20. This upward trend reflects investor confidence in the airline’s prospects, particularly in light of Morgan Stanley’s optimistic assessment.
